Deke Corporation suffers huge losses from silver hedging! Is Shi Weili just unlucky or overly gambling?

Catch the carbon number, rework the value of the new power-and-electricity industry

Di Ke Co., Ltd., the darling of the capital markets, is actually stuck in the hard life of the photovoltaic silver paste silver浆 industry that makes money from processing fees, yet it keeps dreaming about outsmarting the odds—getting rich overnight by doing a little and reaping big.

By acquiring SOTER (DuPont’s photovoltaic business unit), Di Ke Co., Ltd. obtained the strongest weapons for a legal attack in the silver paste field in terms of intellectual property: so the company began rights enforcement and claims across the whole market—3 patent lawsuits, and it managed to collect 600 million yuan.

Claiming it was using hedging as cover, it took a short position on silver, but it lost 600 million yuan badly. Now, the Di Ke Co., Ltd. that remembers nothing but “after the fact” is preparing to move into the storage sector……

It seems Di Ke Co., Ltd. has long seen through the essence of the low-margin photovoltaic silver paste business, and the future outlook doesn’t look too bright.

Making the same photovoltaic silver paste, in 2025 when silver prices swung violently, Juhe Materials could make money, but Di Ke Co., Ltd., the leader in silver paste, suffered losses.

In 2025, Di Ke Co., Ltd. also posted its worst performance since going public.

The annual report released on March 20 shows: In 2025, Di Ke Co., Ltd. achieved total operating revenue of 18.046 billion yuan, up 17.56%; total profit was -230 million yuan, down 162.97% year over year; attributable net profit to shareholders was -276 million yuan, down 176.8% year over year.

Today, in this “Catch the carbon number,” we’ll focus on why Di Ke Co., Ltd. suffered a large loss.

In one sentence: shorting silver was a high-stakes gamble—and it failed!

So, can Di Ke Co., Ltd.’s losses be avoided? Is this “acts of nature,” or “man-made disasters”?

0****1

The magical hedging—massive loss of 641 million yuan!

Di Ke Co., Ltd.’s losses in 2025 came from non-core business.

The annual report clearly states: “The change in performance mainly comes from non-recurring gains and losses, and the amount affecting net profit attributable to shareholders of the listed company is -4.40 billion yuan.”

Di Ke Co., Ltd. said: “To respond to the risk of fluctuations in the silver powder price, the company carried out hedging operations through silver futures contracts; to reduce the cost of purchasing silver powder and respond to the risk of silver powder price fluctuations, the company conducted silver leasing business. During this period, the silver price rose rapidly and sharply, and the company recorded significant losses from fair value changes, based on the fair value changes on the balance-sheet date, for both silver futures and silver leasing in accordance with the silver point valuation.”

From the 2025 annual report; analysis of non-core business

We all know that last year, especially in the fourth quarter, silver staged an epic surge.

Last year’s fourth quarter overall followed the rhythm of “a high in October followed by a pullback, a volatile buildup in November, and accelerated topping in December,” with a quarterly increase of about 53%.

Unfortunately, Di Ke Co., Ltd. went short, completely going against the market trend.

So, because of silver, how much did Di Ke Co., Ltd. actually lose?

In the 2025 annual report, Di Ke Co., Ltd.’s non-recurring gains and losses items explicitly state: “other than effective hedging transactions related to the company’s normal operating businesses; the fair value change gains and losses arising from financial assets and financial liabilities held by non-financial enterprises, as well as gains and losses from the disposal of financial assets and financial liabilities,” and this amount is as high as 641 million yuan!

In the financial statements, the non-core business section further discloses: investment income was -272 million yuan; fair value changes were -411 million yuan……

In the notes column, the company further explains: “To respond to the risk of silver powder price fluctuations, the company carried out hedging operations through silver futures contracts; to reduce the cost of purchasing silver powder and respond to the risk of silver powder price fluctuations, the company conducted silver leasing business; to respond to the risk of foreign exchange rate fluctuations, the company purchased foreign exchange derivative products when appropriate; affected by silver price and exchange rate fluctuations, it generated some investment gains and losses from fair value changes. And the floating gains and losses arising from fair value changes at period-end of the company’s special investment funds and asset management plans.”

For Di Ke Co., Ltd.’s explanation, in this “Catch the carbon number,” we don’t agree. Di Ke Co., Ltd.’s actions actually magnified the risk of price fluctuations, and completely failed to manage risk from the perspective of hedging.

In other words, when silver surged, what Di Ke did wasn’t hedging at all—it was pure speculation!

From the 2025 annual report; non-recurring gains and losses items and amounts; unit: yuan

0****2

Di Ke’s gambling

Silver futures are high-risk financial derivatives, and listed companies face strict restrictions on them.

Di Ke Co., Ltd. manages silver futures using margin amount quotas. Previously, Di Ke’s approval额度 (the maximum margin limit) was always no more than 100 million yuan.

On October 28 last year, Di Ke Co., Ltd. released the “Announcement on Carrying Out Financial Derivatives Trading”: the outstanding balance of foreign exchange derivative transactions would not exceed 2.5 billion yuan; the guaranteed amount quota for silver futures/options contracts would not exceed 200 million yuan, and the quota could be reused cyclically within the period of authorization validity.

In short, management’s authorized quota increased by 1x. At the interactive platform, the company also clearly stated: the scale of silver futures hedging matched the business, and did not exceed the approved quota.

The period of authorization validity would last within twelve months from the date of approval at the shareholders’ meeting. The date the shareholders’ meeting approved it was November 13, 2025.

Perhaps precisely because it obtained such a golden sword, in the fourth quarter of 2025 Di Ke Co., Ltd. increased the trading scale of silver futures. At that time, silver prices were at their most frantic rising phase.

With sharp volatility and a larger investment quota on top of it, Di Ke Co., Ltd.’s fourth-quarter losses were the biggest.

It feels like Di Ke Co., Ltd. was rushing to “send money.”

Worth noting: besides silver futures, Di Ke Co., Ltd. is also doing silver leasing.

Silver futures don’t need much explanation. They are both a strong tool for hedging and a high-risk investment project.

So, what is silver leasing?

Silver leasing refers to a financing or risk management method where a company borrows physical silver from professional institutions (such as banks or precious-metal leasing companies), uses it within an agreed period, pays lease fees on schedule, and returns an equivalent amount of silver at maturity.

Generally speaking, through silver leasing, a company can obtain the silver raw materials needed for production without immediately tying up large amounts of cash, thereby alleviating procurement funding pressure caused by high silver prices. At the same time, the leased silver can be used for production. After product sales are collected, the company can return the equivalent amount of silver through means such as market purchases or futures hedging, achieving cost smoothing and optimization of capital efficiency.

However, the leasing term involves price fluctuations, so silver leasing naturally has risks.

In theory, if a company uses silver leasing for hedging, it should go long on one side and short on the other, to hedge risks and smooth profits.

But Di Ke Co., Ltd. didn’t just go the wrong direction on silver—it didn’t hedge at all. It was shorting in both directions (silver futures and silver leasing). When silver prices fall, the result can only be losses magnified.

If a company goes long on both sides (or shorts both sides), then the purpose of hedging is lost and it becomes more like gambling.

Di Ke Co., Ltd. should be very clear about its situation—or it only wanted to bet hard and make money quickly, not to scrape a living in a tough business model.

The photovoltaic silver paste business is indeed simple: buy silver powder and charge a certain processing fee on top of the silver point price basis.

But that’s also a very stable business model. It is highly similar to a company that sells gold jewelry: driven by the price of key raw materials, and mainly aiming to earn processing fees. Gold jewelry enterprises that do hedging typically use a ratio in the 50%–70% range, with a small number of top-tier companies reaching 70%–80%. For A-share listed company Tsai Bai Co., Ltd., the hedging ratio is about 80%–90% (close to full hedging).

03

It’s hard to get rich from windfalls; hard to fatten from night grass

There’s something quite strange about Di Ke Co., Ltd., worth pondering.

Di Ke Co., Ltd. acquired a well-known peer last year—SOTTER. Now Di Ke Co., Ltd. holds 60% equity in SOTTER, and completed the equity change in September last year. SOTTER used to be the photovoltaic silver paste business unit under DuPont. Its technical strength and patents are unquestionable. No need to elaborate.

So, did SOTTER invest in and lose money on silver in 2025?

Obviously, the answer is no.

The announcement shows: Zhejiang SOTTER achieved net profit attributable to the parent for 2025 of 98.0546 million yuan (note: the fourth quarter was also profitable).

Di Ke and SOTTER are both peers and parent-subsidiary companies, and they have related-party transactions.

(1) The 2025 annual report shows that SOTTER is Di Ke’s second-largest customer, with procurement as high as 2.348 billion yuan. The sales content from Di Ke is silver powder.

(2) Di Ke Co., Ltd. centrally procures silver powder from suppliers, and then resells it to SOTTER. Di Ke’s stated reason is: centralized procurement helps secure preferential terms.

Then, whose business did the silver leasing come from? Why didn’t SOTTER participate in the investment in silver futures?

Anyway, SOTTER’s performance is good, and that’s good for everyone.

When Di Ke Co., Ltd. acquired SOTTER, it promised that Zhejiang SOTTER would achieve audited net profit for 2025, 2026, and 2027 of not less than RMB 68.10 million yuan, RMB 90.80 million yuan, and RMB 128.10 million yuan (hereinafter referred to as “committed net profits”), with cumulative committed net profits not less than 287.00 million yuan. SOTTER’s net profit attributable to the parent for 2025 was 98.0546 million yuan, far exceeding the committed 68.10 million yuan, meaning it overfulfilled the “task.”

Di Ke Co., Ltd. is “spoiling” SOTTER, and that can be understood. Because SOTTER is especially strong—it is Di Ke’s secret weapon. Zhejiang SOTTER obtained a global patent family centered on lead-tellurium oxides by acquiring the former DuPont Solamet business (about 227 items). These are the underlying foundational patents for photovoltaic silver paste, covering mainstream technology routes such as PERC, TOPCon, and HJT.

Because of these patents, Di Ke Co., Ltd. and SOTTER have sued Juhe Materials (now settled), as well as the currently suing RiYu Guangfu, Jingyin (a subsidiary of Suzhou Goodway), and Guangda Electronics.

The company’s announcement states: (1) The company, due to disputes over the infringement of invention patents, separately sued Jiangsu Riyu Guangfu New Materials Co., Ltd. and Suzhou Jingyin New Materials Technology Co., Ltd. These lawsuits have been accepted by the Jiangsu Provincial Higher People’s Court, with case numbers (2026) Su Zhi Min Chu No. 1 and (2026) Su Zhi Min Chu No. 2, respectively. The amount involved in each case is 200,000,000 yuan, totaling 400,000,000 yuan in aggregate for now.

(3) According to Di Ke Co., Ltd.’s published “Announcement on Major Litigation Matters of Subsidiaries” from Wuxi Di Ke Electronic Materials Co., Ltd., Zhejiang SOTTER Materials Technology Co., Ltd. (hereinafter referred to as Zhejiang SOTTER) is the plaintiff, suing Zhejiang Guangda Electronics Technology Co., Ltd. for infringement of invention patent rights, with the amount involved of 200 million yuan (case number: (2025) Zhe Wu Xi Di Ke Electronic Materials Co., Ltd. 2025 Annual Report Full Text 215 Zhi Min Chu No. 3). Subsequently, Zhejiang Guangda Electronics Technology Co., Ltd. sued Zhejiang SOTTER for maliciously initiating intellectual property lawsuits. As of the date of this report, both cases are still under trial.

In summary, Di Ke Co., Ltd. and SOTTER are conducting three patent infringement lawsuits. The claim compensation amounts for each defendant are 200 million yuan.

600 million yuan is not a small sum. If Di Ke wins the cases and they are executed, then Di Ke would make a fortune—just enough to cover the losses from shorting silver!

Epilogue

Although Di Ke Co., Ltd.’s performance blew up, based on the company’s stock price movement the day after it released its annual report, investor sentiment looks stable. This may be because investors had psychological expectations and because silver prices have recently been falling.

After the last trading day of 2025, Shanghai silver closed at 17,074 yuan per kilogram, then after a big rally it also pulled back. If silver prices continue to fall, Di Ke Co., Ltd.’s mark-to-market unrealized loss could potentially reverse some portion.

We said above that photovoltaic slurry/paste is a very simple business—earning processing fees.

Although photovoltaic technology is developing rapidly and silver prices fluctuate violently, enterprises put forward higher requirements for silver paste. They want to reduce silver consumption and use cheap metals like copper to replace silver to get rid of dependence on silver. Therefore, silver paste companies are all conducting related research and development. But right now, there isn’t a technical gap between silver paste companies, and some photovoltaic key-material companies are even preparing to get personally involved in making copper paste.

In 2025, the gross margin of photovoltaic conductive silver paste was only 8.57%, and it also decreased year over year.

In short, photovoltaic silver paste is not a good business—it’s tough. Besides gambling big on silver futures, Di Ke Co., Ltd. is also aiming to enter a high gross margin segment—storage chips.

In September 2024, Di Ke Co., Ltd. acquired 51% equity interest in Yin Meng Holding. Based on business development, in October 2025 it announced the acquisition of 62.5% equity interest in Jiangsu Jingkai, achieving a closed loop of the DRAM storage industry chain and building an integrated advantage spanning “applied development and design—wafer testing—packaging and testing.” A series of LPDDR and DDR products have grown rapidly in the consumer electronics and intelligent terminal markets, and it also focuses on key layout of SoC-DRAM packaging products, CXL, and LPWDRAM (low-power high-bandwidth storage chips, also known as Mobile-HBM) and other AI compute power and edge-side AI-related products.

From now on, when looking at Di Ke Co., Ltd., we might not be able to fully use the photovoltaic industry as the reference. We also hope Di Ke can achieve results in the integrated circuits sector, and not keep gambling on high-risk futures.

However, “the landscape may change, but one’s nature is hard to alter”—we’ll just have to wait and see!

Edited & Reviewed: Jiec arbon